What can I do as a borrower?

To prepare for your home loan application, it’s usually best you cut out or at least reduce unused debt facilities.

For example, if you have a $2,000 limit on your credit card but find that you rarely use this amount per month, consider cancelling it.

Another example is expenses that aren’t vital and can be easily cut from your spending such as entertainment subscriptions, going to the pub, gym memberships, going to music festivals or sporting events, or simply eating take-away on a regular basis.

Please call us on 1300 889 743 or fill in our free assessment form and we can weigh up your home loan options.

There are lenders out there that don’t apply debt to income ratios caps.

I have some personal debts including two credit cards totaling $15,000 and a personal loan of $25,000. I earn $90,000 a year. I wanted to know what’s an acceptable debt to income ratio if you only have personal debt and whether it’ll affect my chances of getting a home loan? I’m planning to get a loan of 90% against a property of $500,000.

Hi Sanadis,
Banks consider most personal debt such as car loans, credit cards and personal loans should be kept to a bare minimum. DTI is calculated by adding all of your total debts and liabilities and then divided by your gross income (before tax income).
The DTI ratio is calculated by the total loan divided by your income, and a ratio of more than six is considered financially risky by the lenders. As per the details that you’ve provided, the total debt is $490,000 ($15,000 + $25,000 + $450,000). The following formula would then be applied: $490,000 ÷ $90,000 = 5.44 LTI. What this means is that your total debt is 5.44 times your combined income.
Your debts alone won’t necessarily affect your chances of obtaining a home loan, however, you should be able to repay both the debt and the home loan. You could try our ‘how much can I borrow’ calculator https://www.homeloanexperts.com.au/how-much-can-i-borrow/ or call us on 1300 889 743 and find out.

We’re experts at finding the right home loan solution for our customers